Senate Republicans announced on Monday an important update to their Affordable Care Act repeal bill, the Better Care Reconciliation Act of 2017: Under the BCRA, people in the non-group insurance markets who don't maintain continuous insurance coverage would be locked out of the insurance market for six months before being able to obtain coverage once again.
The provision is meant to address a problem that economists refer to as adverse selection. A functional health insurance market requires the participation of enough healthy people to subsidize the costs of unhealthy people. Healthy people, however, are less likely to need health insurance and thus are less likely to purchase (or "select" into) health insurance. If enough healthy people forgo insurance and stay out of the risk pool, insurance companies are forced to increase premiums to cover the costs of a sicker risk pool, which, at worst, then drives even more healthy people out of the market, prompting a so-called "death spiral."
Before the passage of the ACA, insurance companies solved the adverse selection problem by either denying coverage to sick people or charging them extremely high premiums. After the ACA, this problem was solved by the individual mandate requiring all Americans to have insurance coverage, or else pay a penalty. The American Health Care Act, the House of Representative's ACA repeal bill, eliminated the individual mandate and replaced it with a provision allowing insurance companies to charge higher premiums to people who didn't maintain continuous coverage. The bill the Senate released last week, however, didn't contain a mechanism to address this issue, prompting concerns that the legislation would result in an insurance market death spiral.
It's unclear if this provision would incentivize more healthy people to purchase insurance than a mandate, but a Congressional Budget Office score on the legislation (including this revision) is expected Monday afternoon.